The Dr. Who Theory of double-dip recessions.

Dr. Who - TARDIS

Investment in business is likely to suffer from media coverage of the ‘double-dip’ recession, making an even stronger case for P2P Lending.  Today, FundingKnight blogger Mark Harrison shares his thoughts on why, when it comes to recessions, only Dr.Who can really tell if we’re in one or not….

 

Depending on your age, you may believe that Dr. Who is either a trendy young man, who appeared on our screens a couple of years ago… or you may believe that he wears a long flamboyant scarf. (I’m firmly in the latter camp, by the way.)

What you may have missed is that, until yesterday,  the only person who could say we were in a recession, double- or single-dip,  in the UK is the good Doctor, because doing so requires the ability to time travel.

This is because, here in the UK, we have a precise definition of what a recession is, and it’s different to the definition they use in the USA.

Over in the States, there’s a body called the National Bureau of Economic Research, and part of their job is to say when the US economy enters a recession. They use a broad range of factors, and basically announce what they’ve decided.

Here, however, a recession has a specific meaning – it’s two consecutive quarters of “negative growth” (which sounds like a politician’s way of saying “shrinkage” to me).

Now, about three months ago, it was announced that Q4-2011 was negative… to be fair, only just, because GDP  was only 0.3 percent less than the third quarter. Still, no-one who actually lived here in October, November or December would have thought we were in a boom.

So, what actually happened yesterday was that the official figures were released, and, surprise, surprise, it turned out that GDP growth in  Q1-2012 was, also, negative. So, we’re officially, we’re in a recession again. And, because we actually managed to grow for a bit in Q3 last year, before slipping back, we’re in a ‘double-dip’ recession.

Again, the ‘shrinkage’ was tiny – this time, one 0.2 percent. However, it’s still negative, and that means we’ve now been in a recession since October. There’s a slight bizarreness about the fact that, had Q3 also been bad, we’d still be in the same recession – so anyone who says that because we’re in a double dip then ‘this is the worst ever’ seems to have an unusual viewpoint.

However, it’s official – on Monday, only the Good Doctor could confirm that we’re double-dipping – as of yesterday, we all can – the Force is strong in us [or is it the other bunch who say that?]

Photo credit  – used under Creative Commons licence.

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